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Q&A – Is Blackrock to Blame For Skyrocketing Home Prices & Rent Rates in Florida?
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Today’s Entry: Good morning Brian, Thank you for all your information and efforts on behalf of truth and fairness. Having read what you stated about rents and home ownership my question is this; Are we able to find how pervasive Blackrock Group’s purchases of homes etc., in Florida are? I’ve read a couple of articles sent to me by my realtor daughter and this company is frankly scary.
Bottom Line: There’s no doubt institutional investors have become a major part of Florida’s real-estate market. It’s also true Blackrock is the most aggressive of the bunch. There’s also no doubt the sizeable share of Florida’s housing market they’re accounting for is in part responsible for the ever-rising prices for homes and rent rates. What you might be surprised by is how little has changed in this regard. I’ll break it down for you...
CoreLogic regularly updates info on the “Share of Home Purchases made by Investors”. This data includes all home purchases made by known investment companies. A couple of questions for you... Over the past decade what percentage of the residential real-estate market do you think they’re accounted for? Have a number in mind? The answer is 20%. That’s right, a fifth of total real-estate sales. Again, that’s become the norm. Bigtime institutional investment firms like Blackrock first stepped into the residential home market in a meaningful way over a decade ago during the housing crisis within the Great Recession. At the time they stepped into the market, especially in South Florida, it proved to be a huge help in turning around what had been a three-year collapse of the housing market in South Florida.
Many of the foreclosures which had gone into disrepair were snapped up and fixed up providing an underpinning to our real-estate market allowing it to stabilize and eventually turn around. While institutional investor involvement was widely viewed as a positive a decade ago, its become anything but since. So, here are the next questions... If institutional investors have been a fifth of Florida’s housing market over the past decade...has something recently changed or are we just more aware? Also, is there really something to Blackrock’s involvement specifically that’s driving our market higher? The answers to those questions are yes and yes. But there’s also a whole lot more to that story.
According to the most recent info from CoreLogic, the institutional influence in the housing market is up to about 27%, that’s a 35% increase in their buying activity over the past year. In also means that home buyers are bumping into institutional buyers over a quarter of the time. It’s not quite the highest on record – the big boys accounted for over 29% of the market at one point in 2013 – but it is the largest share of the housing market they’ve accounted for in about nine years. Specific to Blackrock, and why they’ve made the news as a big player in South Florida’s rental market specifically...
Last summer Blackrock bought the property rental company Home Partners for $6 billion. The company which specializes in rent-to-own housing has been rapidly expanded by Blackrock in recent months and is the most aggressive of any of the institutional investors in South Florida’s housing market. As for how that’s playing out in South Florida specifically, here’s the percentage of the housing market comprised of investor purchases by county (rounded):
- Broward: 19%
- Miami-Dade: 28%
- Palm Beach County: 15%
So, there’s obviously a huge difference based on location within South Florida, with Broward and Palm Beach County experiencing below average institutional activity, while Miami-Dade is seeing some of the largest investor buying in the country. Now given that housing prices and rent rates have been rising as fast in Broward and Palm Beach County as in Miami-Dade most recently, there’s another dynamic in play. And it's the biggest dynamic that’s influenced our housing market over the past year, second/vacation home buyers.
According to Redfin, demand for second home purchases have surged by 178% over the past year. That’s not a mistake. I really said demand for second/vacation homes is up 178%. Btw, that’s the national average. Given that South Florida was already ground-zero for second and vacation homes nationally, the explosion of demand since the end of the lockdowns has created the frenzied effect we’ve seen in South Florida’s market. The combination of low inventory, investor involvement but especially exploding demand for second houses is what’s driving our housing market.